Cadbury accepts sweetened Kraft deal ... finally

Together, the two will challenge Virginia-based Mars Inc. as the world's largest candy company. Mars itself completed a massive $23-billion acquisition of William Wrigley Jr. Co. in 2008.

Kraft’s raised offer of 500 pence in cash and 0.1874 Kraft shares for each Cadbury share shakes out to 840 pence -- or roughly $13.78 -- per Cadbury share. Shareholders of the 186-year-old British company are expected to approve the deal, which also calls for 265 million new Kraft shares to be issued, by the Feb. 2 deadline.

The takeover is valued at 13 times Cadbury’s estimated earnings before interest, tax, depreciation and amortization in 2009. Executives said they hope the pairing will make for accelerated long-term growth and more accessible global markets.

"Kraft Foods believes a combination represents a strong and complementary strategic fit, creating a global confectionery leader with a portfolio of more than 40 confectionery brands each with annual sales in excess of $100 million," the company said in a statement.

Northfield, Ill.-based Kraft, which makes Oreo cookies and Nabisco snacks, went public in September with its original offer of about $16.7 billion.

Cadbury, which makes the familiar chocolate Easter eggs along with Trident and Stride gum, had derided Kraft in the early part of the negotiations as a “low-growth” company, calling a merger an “unappealing prospect.”

Other potential bidders, including Italian Tic-Tac maker Ferrero Group and U.S. giant Hershey Co., have until Monday to make a firm offer for Cadbury, the UK Takeover Panel said Tuesday. Swiss packaged foods company Nestle dropped out of the race earlier this month.

The newly minted conglomerate has some politicians and unions concerned.

Prime Minister Gordon Brown made reference to Europe’s 23 million unemployed people this morning when asked at a press conference about the deal.

"The one thing I want to say is this: We are determined that the levels of investment that take place in Cadbury’s in the United Kingdom are maintained, and we’re determined, of course, that at a time when people are worried about their jobs that jobs in Cadbury’s can be secure.”

Jennie Formby, national officer for food and drink of Britain’s Unite the Union, a 2-million-member labor union, said the Cadbury deal marked a “very sad day for UK manufacturing.”

"A successful, iconic, independent UK brand will now be owned by a giant company with massive debt,” she said in a statement. " Whatever good intentions Kraft may have towards Cadbury's workforce, the sad truth is there will be an irresistible imperative to pay down their debt, and this raises real fears for jobs and investment in this country.”